Anyone ever seen a loot system like this?

Personally, I'm against a system where one person gets to choose the loot for everyone else (effectively by kicking people). I've worked with too many scoundrels in ffxi to ever believe that's a fair system. Even in situations where people behave honorably, it still leads to bloated waiting lists for loot that either ends in:

1) Early members getting all their stuff and leaving the newest members high and dry.

2) A waiting list so long, you can't get new members because it would take too long before they could ever get anything, and they join smaller, newer groups while the old group collapses without enough people.

Whatever system is adopted, there should always be a chance for all participants to get something good which can't be taken away lest over-zealous leaders kick you from the linkshell for not "sharing" with the more "deserving." There should always be a chance for something good every time you win a big fight.